Debate intensifies over electricity deregulation

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On the heels of back-to-back increases for some Oklahoma utility companies, a group advocating changing the state’s utility structure has announced it is stepping up its efforts. (Photo by Andrey Metelev via Unsplash)

On the heels of back-to-back increases for some Oklahoma utility companies, a group advocating changing the state’s utility structure has announced it is stepping up its efforts. Legislation is coming in 2023 that would allow businesses to choose their electricity supplier.

But such a change would make no sense for Oklahoma, utility officials said — especially after providing some of the lowest rates in the country and during what promises to be the hottest summer ever. registered in Oklahoma.

The Alliance for Electrical Restructuring in Oklahoma, or AERO, pointed out that Oklahoma Gas and Electric, which serves much of central Oklahoma, and Public Service Co. of Oklahoma recently won rate increases totaling $1,575 billion dollars. Businesses are recouping costs from February 2021 winter storms while raising rates to maintain and upgrade their systems.

“This despite OGE reporting annual net income of $360 million in 2021 and American Electric Power (PSO’s parent company) reporting well over $2 billion,” Mike said. Boyd, executive director of the Alliance for Electrical Restructuring in Oklahoma.

“They (Oklahoma’s electric utility companies) cannot serve the interests of their investors by seeking to maximize profits while serving the interests of Oklahoma’s ratepayers, who need energy affordable and reliable,” Boyd said. “We can fix this system by injecting choice and competition into the market and allowing ratepayers to choose who they buy their electricity from.”

AERO argues for a system that would allow commercial consumers to choose their supplier. While a deregulated market may present some risk to residential consumers, businesses are better able to negotiate a contract with suppliers, Boyd said. The ability to guarantee a fixed cost for a period of time helps companies plan budgets and helps manufacturers more accurately manage production costs, he said, especially in times of rapidly rising inflation.

AERO’s coalition includes dozens of nursing homes across the state, healthcare organizations like the Bethany Children’s Center, entertainment venues like the Tower Theater and Cain’s Ballroom, bars and restaurants, and more. At the Oklahoma Corporation Commission hearings, the Oklahoma Restaurant Association, Oklahoma Hotel and Lodging Association, Care Providers Oklahoma and other companies also made comments in support of changing the company’s utility structure. ‘Oklahoma.

The winter storms of February 2021 shed a different light on the discussion around utility deregulation. Some Texas customers received five-figure utility bills for the month as the weather created a perfect storm of high heating demand and low supply of fuel used for heating systems.

Oklahoma customers, however, were not subject to the high bills inflicted on Texas customers who had contracts with utility providers that offered no protection against fluctuating fuel costs.

Similarly, Oklahoma customers are not protected against fluctuations in fuel costs, as fuel costs are passed directly to the customer and are not part of utility rate structures. However, customers didn’t have to pay five-figure bills when the Oklahoma Corporation commission, legislature and utilities proposed a plan for companies to fund fuel costs and pay down debt with decades of small bill increases.

“Thanks to the Oklahoma Corporation Commission and its utility regulation, Oklahomans continue to experience energy costs well below national averages and utilities are held accountable for grid performance as well as upgrades and maintenance. ongoing maintenance of generation facilities and the grid,” reads an OG&E statement provided Log recording.

Some 14 states have deregulated their utility markets over the past two decades, with varying results.

“Retail energy deregulation over the past 20 years has not proven to save customers money or improve the grid,” reads the OG&E statement. . “Many studies indicate that deregulated jurisdictions have some of the highest average retail electricity prices in the United States. Today, Oklahomans benefit from the Southwest Power Pool’s integrated market, ensuring that the cheapest energy each day is available on the grid for customers.

Boyd said states with higher utility rates typically have higher housing costs, average salaries and other indicators. Although Oklahoma’s rates are low, that doesn’t prove they’re offering the best deal to Oklahoma residents, Boyd said.

Oklahoma Corporation Commissioner Bob Anthony, one of three panel members, did not support the 2021 storm fuel royalty funding plan. On Monday, Anthony filed a dissent after discovering that estimates of the cost of financing fuel costs were somewhat lower than the bonds actually sold.

“The much-vaunted 2.58% ‘low’ bond yield actually hit 5.087% near the end of the bonds’ ridiculously long, decades-long life,” Anthony wrote. “The commission’s open-ended funding order failed to protect consumers and left all the risk of rising interest rates to taxpayers.”

OG&E’s statement underscored that the company has a proven track record of keeping the lights on and will continue to provide excellent service to its customers despite the challenges.

“We are in the midst of a heat wave that could turn out to be the hottest summer on record in Oklahoma, which means that all available generation facilities in the SPP are putting power on the network,” the statement said. “OG&E is committed to providing the electricity to sustain and enhance the lives our customers need.”

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